Do Schools Really Not Teach Personal Finance?

I was reading through some posts on I Will Teach You to Be Rich when a thought suddenly occurred to me. Robert Kiyosaki sold quite a few copies of his book by claiming that there are secrets that the rich teach their kids that the poor and middle class do not. Perhaps there is something to that claim, but personally I think it’s just a catchy phrase to sell books. Yes, I’ve read Rich Dad, Poor Dad. It was very inspirational.

I’m not going to try to debate Rich Dad, Poor Dad. I think John T. Reed has done a better job with that than I ever could. I just want to look at the claim that public schools don’t teach kids to handle finance, and that poor and middle class parents don’t teach their kids how to handle finance.

I’ve made some stupid mistakes with money. I’ve had some debt, I’ve made some bad investment decisions, I’ve blown way too much money trying to start my own “business” through varying scams. I’ve paid plenty of what Dave Ramsey calls “Stupid Tax”. I’ve been burned and I’ve learned. I want to make the point that schools do tend to teach students everything that the need to *know* about money.

If you have $5 in your wallet and buy a $4 latte, how much money do you have left?

$1.

See how simple it is? Now you just have to scale it up. If you make $2000 a month in take-home pay, and you have a $1500 mortgage, can you afford a $600 a month car payment?

Let’s see: $2000-$1500= $500. The answer is no, especially since no groceries, bills, or anything else has been factored in.

Personal finance is little more than simple math. OK, fine when we throw credit cards into the mix, now we deal with interest, and mortgages deal with amortization of loans. Still, we’re not even up to 8th grade math yet.

I would like to contend that even the worst public schools (and parents) teach the fundamentals that every child needs for personal finance. What the schools and parents don’t teach are the behavioral aspect of finance. They also may not teach concepts like risk.

It seems to me that what happens is, we like hearing that it’s not our fault. It’s not your fault that you ran up more credit card debt than you can pay. Your school and your parents never taught you how to handle your money. That definitely feels better than hearing “You screwed up. You just couldn’t wait to buy that HDTV, so you bought it for 90 days same as cash and ended up paying 21% interest on it.”

Unfortunately, it also doesn’t seem to me that we can make any progress in our personal finances or personal wealth until we begin to take some personal responsibility for our own situations. Don’t like your job? Don’t make enough money? Why not try to learn new skills to get a better job, or do some freelance work on the side? Don’t know how to invest? Then why not get a few books? You can download free podcasts on a variety of subjects from iTunes. I personally recommend from the subject of this post that you start with Dave Ramsey and Dan Miller. Both have free material that has been tremendously helpful to me lately.

I’ll include some books below that I recommend. I’ll link to Rich Dad, Poor Dad as well, but I don’t recommend it be taken too seriously for personal finance or self-improvement. Sure, it’s motivational and it’s a good read, but it really doesn’t give you much hard information, if any.

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2 Responses

  1. Love your philosophy. Hopefully more people will listen and take responsibility for their own spending habits. Unfortunately, I think the masses probably just want more helicopter drops and bailouts…

  2. Phil, thank you for the kind words. I do have a post in the works about individual responsibility in the current economic climate. I’ve been plagued with laptop and smartphone failures, so once I get enough time at one device, I’ll finish it and post it.
    I agree that many seem to want to wait for somebody else to step in and save them, not realizing that it isn’t likely to work in any case.

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